The former Anfield man also believes that there is something amiss with Brendan Rodgers' backroom staff being sacked.
The Reds famously missed out on the Premier League title the season before last having sat at the top of the table with the title in their hands before a 3-3 draw at Crystal Palace, having been leading 3-0, saw the crown go to Manchester City.
An inability to get over the line ultimately saw Luis Suarez leave for Barcelona that summer and Brendan Rodgers’ side struggled to replace him last season, slumping to a sixth placed finish.
And Toshack believes that title failure is still looming large over the club and the squad.
"Liverpool have still got a hangover from those three goals they conceded against Crystal Palace,” he said.
“Incidents like that can make or break a player or manager. I don’t see things getting any better at the moment for Liverpool. Liverpool have gone three years without a trophy, I don’t remember that happening in my time.”
Last season started poorly for the Reds, with them finding themselves at the wrong end of the table, before a fine second half of the campaign saw them surge up the standings.
Despite that run, they lost in two semi-finals against Chelsea and Aston Villa - in the League Cup and FA Cup respectively - coupled with a shocking 6-1 loss to Stoke on the final day, which left Brendan Rodgers’ future at the club hanging in the balance.
He has since seen his assistants Colin Pascoe and Mike Marsh leave the club following an end of season review, and Toshack is concerned something is not quite right at Anfield.
“It’s very unusual that a coach stays on when his backroom staff have been sacked. There’s something not quite right there,” he added.